What happened

Shares of lidar maker Aeva Technologies (NYSE:AEVA) were trading sharply lower on Monday, after a Morgan Stanley analyst initiated coverage of the company with a not-exactly-bullish note.

As of 10:45 a.m. EDT, Aeva was down about 10.7% from Friday's closing price.

So what

In a note released early on Monday morning, Morgan Stanley analyst Joseph Moore initiated coverage of Aeva with a rating of equal weight and a price target of $11. (Aeva closed at $9.71 on Friday.) 

Moore wrote that Aeva's so-called 4D lidar technology is "unique" in the automotive driver-assistance market, and that the company has "carved out material differentiation" in the increasingly crowded lidar-for-autos space. 

A white Mercedes-Benz SUV with visible lidar sensors and Aeva and ZF logos on its doors.

In some important ways, Aeva Technologies stands out from rivals in a crowded field. But its current valuation seems generous, an analyst wrote. Image source: Aeva Technologies.

He also cited the company's partnerships -- including those with Japanese auto-parts giant Denso and Volkswagen-backed autonomous truck start-up TuSimple Holdings (NASDAQ:TSP) -- as factors that help Aeva stand out from the pack.

So why is the stock down? It's that price target: Moore thinks it will take some time for Aeva, which only went public in March, to grow into its current valuation -- or put another way, the stock looks expensive right now.

Now what

Investors watching Aeva and others in this space can look ahead to the company's second-quarter earnings report, likely in mid-August.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.